Sale of Kapital. Fedun and Alekperov sell the last major financial asset
Forbes found that the structures of Leonid Fedun and Vagit Alekperov put up for sale the Group “Capital Asset Management” – shareholders are afraid of a repeat of the 2008 crisis amid falling profits. Among the possible buyers of this asset is Promsvyazbank
Representatives of financial group “Kapital Asset Management” are actively negotiating the sale of the holding. This was reported by three interlocutors in the stock market who know about such intentions of the group shareholders and are familiar with the progress of negotiations for the deal. The priority is to sell all the structures, which make up Kapital. If no such agreement is reached, part of the business may be sold, one of the sources specifies. Among the most likely buyers – Promsvyazbank, with it are actively negotiating and even held due diligence, but the decision has not yet been made, told Forbes two of the three interlocutors.
The shareholders want to sell the group of companies for an amount equal to the entire capital of the holding plus 1 billion rubles, one of Forbes’ sources specifies. The amount of capital at the end of 2017 was 2.8 billion rubles according to IFRS, respectively, the amount of the transaction could reach 3.8 billion rubles.
The press service of MC Kapital (the largest structure of the group) declined to comment. In turn, the press service of Promsvyazbank responded to Forbes’ request that the bank “does not comment on rumors.
Capital Asset Management Group is ultimately controlled by Lukoil’s largest shareholders, Leonid Fedun and Vagit Alekperov, as well as the “Our Future” fund of regional social programs, according to Capital Asset Management’s website. The group includes Kapital Asset Management and Kapital PIF Management in addition to Kapital Management Company.
Management company “Kapital” is one of the key players in the Russian market, which specializes in the management of pension funds. At the end of 2017, this line of business in Kapital Management Company accounted for almost 80% of assets. In total, under the management of the company at the end of the first quarter of 2018 were assets for 161 billion rubles – this is the 14th place in the ranking “Expert RA”.
Usually management companies in a growing market are worth about 2% of assets, says Yuri Nogin, director of ACRA’s Financial Institutions Rating Group. “In a down market, a management company that works with institutional clients will be valued at the lower end, as diversification of such business is difficult. The price offered for Kapital may be called a nominal value and the premium of up to 1 billion rubles is a premium for business reputation, which remains rather high at Kapital,” the analyst explains.
Promsvyazbank has its own small MC “Promsvyaz”, which had almost 40 billion rubles under management at the end of 2017. The main areas of its business are ZPIFs and wealthy clients. At the end of August, the management company “Promsvyaz” was headed by Alexei Kuznetsov, who had previously served as head of the Bank Sector Consolidation Fund, and previously – the position of CEO of MC “EFG Asset Management”, which dealt with the assets of Bin Group.
“Kuznetsov is an ambitious man, and he will probably seek to increase the scale of the business,” says a Forbes source in the stock market. Another source notes that Peter Fradkov, who headed Promsvyazbank this year, also has ambitions to expand his business. “He likes to do business in a way that makes a noise,” emphasizes the financier.
What happened to Kapital
The search for a new strategic investor is due to the shareholders’ unwillingness to repeat the situation of 2008, when due to the volatility on the market the company had to be seriously recapitalized, says one of Forbes’ sources.
In addition, against the backdrop of the threat of sanctions, the risks of owning such an asset are increasing and the income of investors is decreasing. Revenue from trust management services in 2017 amounted to 739 million rubles, down 20% compared to 2016, when the figure reached 929 million rubles, Expert RA agency calculated.
In recent years, the assets of Kapital Management Company have been steadily decreasing. If in 2016 the company occupied the 7th place in the ranking with assets of 275 billion rubles, by the end of 2017 it moved to the 14th place due to the reduction of the portfolio to 175 billion rubles. The reason was the termination of the management of funds for military mortgages – the company did not win the tender. At the end of 2017, shareholders recapitalized the MC for 1.5 billion rubles.
The reduction of assets continued in 2018. Two major clients left the company – Sberbank NPF, which accounted for about 40 billion rubles, and the structures of FC Otkrytie – about 8 billion rubles. The departure of Sberbank Non-Governmental Pension Fund was accompanied by the transfer of a part of the team to Sberbank Asset Management company. Furthermore, in early September the manager of MC “Kapital” was also changed – Vadim Soskov resigned and the company was headed by deputy general director Konstantin Belikov.
Burned on pensions
The sale of a financial asset by Lukoil shareholders looks like a logical step, because the threat of sanctions makes non-core investment business less profitable and more risky, says Yuri Nogin of ACRA.
The Fedun and Alekperov structures have long been reducing their presence on the financial markets: in 2008, they sold the former head of Rosgosstrakh Danil Khachaturov insurance company Kapital Insurance, and in 2012 the bank FC Otkrytie purchased from them the NPF Lukoil-Garant.
“Non-core financial assets are interesting when the market grows, and when stagnation begins, especially in companies that focus on specific clients, interest in them disappears,” Nogin notes.
The situation with management companies which work with pension assets corresponds to the current situation on the market of private pension funds (PPF), adds the analyst.
According to him, the funds are now in a period of stagnation due to the freezing of pension savings in 2014 and the lack of new inflows into the system. This situation will not change until the government resolves the issue of the new accumulation system – a PKI.
In the meantime, the NPF market is undergoing consolidation, large groups are forming, which usually resort to the services of the MC included in the perimeter of the financial group to manage funds, notes Nogin. “In general, the situation in which new pension savings do not go to NPFs has led to the fact that competition among MCs has heated up, burned out and is no longer there,” he states.